No service tax obligation because consignment notes have not been issued, activities cannot be covered by “GTA” services: CESTAT

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freight forwarding agency services -CESTAT-taxscan

Delhi Customs, Excise and Service Tax Appeals Tribunal (CESTAT) has no service tax liability as waybills have not been issued, activities are not may not be covered by freight forwarding agency services.

The appellant is a trust registered under the Registry Act 1908. It was incorporated on 05.01.2009 for the purpose of carrying out charitable purposes including yoga teaching and training to achieve a healthy and disease-free India.

The appellant is also registered under section 12AA read with section 12A of the Income Tax Act 19613. The Appellant claims that in order to achieve his goals, he undertook to organize residential and non-residential yoga camps to spread yoga training and Vedic knowledge for which he received donations from his members.

However, an investigation was conducted into the non-payment of service tax on these membership donations, on the transportation costs paid by the appellant and on the amount paid by the appellant for the rental of motor vehicles. In the end, a show cause notice dated 06.04.2014 was issued to the appellant for the period from January 2009 to March 2013 proposing a tax on the request for service with interest and penalties in the category “club service or of association”, “goods and service of transport agency”. and “taxi rental service”. This show cause notice is pending adjudication.

The coram headed by President Justice Dilip Gupta and technical member PVSubba Rao argued that the service of “freight forwarding agency” has been defined in Article 65(26) of the Finance Act to mean any person which provides a service in connection with the transport of goods by road and issues consignment notes, whatever their name. In this case, the consignment notes were not issued and the activities cannot therefore be considered as falling under the services of a “freight transport agency”.

“Thus, the service tax liability could not have been imposed on the appellant under the reserve charge mechanism,” CESTAT said.

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